The Minister of State for Local Government, Ervin Demo, held today a press conference with journalists, during which he spoke about 2026 as a key moment for the future of municipalities, reforms, and new instruments for the institutional, financial, and technological strengthening of local government.
Full statement by Minister Demo:
2026 is a very important year for local government as a whole, also due to the many initiatives that are transformative in nature. It is a crossroads year with regard to the future of municipalities in the country. Several major processes are overlapping. The European integration process is one of them, alongside many other initiatives. At the same time, we should not forget that 2026 is the year when the territorial reform process begins and, in a way, acts as a “capstone” that will encompass all these initiatives, ensuring a healthy foundation for the development of municipalities in the years or decades ahead.
If I were to use one key word to describe the initiatives undertaken over the past months, it would be the strengthening of municipalities. This concept includes both capacity building and institutional empowerment through concrete initiatives such as the Local Government Academy, which represents a historic moment for municipalities in the country. It is the first time municipalities will have a structure focused specifically on their needs. It is a structure directly owned by municipalities, as they finance 50% of the Academy’s costs from the outset, while the remaining 50% is financed by the Central Government.
Moreover, the Academy will serve as a platform where municipalities can share best practices consolidated in their territories, particularly in addressing the daily challenges that vary significantly from one municipality to another. While some municipalities face serious challenges in fulfilling certain functions, each municipality also demonstrates admirable performance in specific areas. The exchange of experience and the creation of a sustainable platform for sharing best models makes the Academy a very powerful instrument for local government.
At the same time, the Academy will naturally become a “hub” where all partners and donors working closely with municipalities will not only continue their support, as they already have—starting with the Strong Municipalities project—but will also find a sustainable instrument for providing assistance to local authorities. I would like to highlight the support provided by our Swedish and Swiss partners in this regard.
In the coming days, or within the first ten days of February, the first training sessions through the Academy will begin. Capacities are being built, and the structure is being consolidated. The entire legal and regulatory framework required for the Academy to operate has been approved. This will be a major success and, above all, an instrument that municipalities will rely on to address many of the challenges ahead, with the ultimate goal of delivering better services to citizens across the territory.
Likewise, 2025 was an important year for the Performance Grant, which was applied for the first time at the local level. The Performance Grant was financed 50% by our partners and donors, including the Swiss Embassy, and 50% by the state budget. Approximately €4 million were allocated to municipalities based on the measurement of clear regulatory performance indicators. What we aim to do in 2026 is to deepen the concept of the Performance Grant. We believe that municipalities that perform better and deliver higher-quality services to citizens should have the opportunity to receive increased funding, turning the Performance Grant into a motivating instrument for improving service delivery.
This year will be crucial for the Performance Grant, as we will move from evaluating generally “cold” regulatory indicators to measuring specific services delivered in the territory and particular municipal functions.
At the same time, 2026 will be an important year because we believe technology will play a critical role in strengthening municipal institutions. We have two major initiatives. AFMIS is a system developed in cooperation with the Ministry of Finance, ensuring nationally unified standards and practices, guaranteed transparency, clearer planning, and—above all—more accurate performance measurement. As mentioned earlier in relation to the Performance Grant, these systems will enable more targeted financing over time, based also on municipalities’ managerial capacities. AFMIS goes beyond finance; it is a management system for financial resources, enabling greater investment in the territory, higher service quality, and improved monitoring of municipal revenue generation. As such, AFMIS represents a very positive innovation.
At the same time, we are implementing a major project that will be transformative for citizens’ experience in accessing local services: the digitalization of local services. The goal is to integrate local services into a unified platform, similar to e-Albania for central government services, creating a single portal for all services citizens require at both central and local levels. This project has already begun and is supported by the World Bank. Its implementation requires substantial work and proactive engagement from all municipalities, which are the primary stakeholders in building a sustainable digital ecosystem at the local level, allowing the range and quality of services to expand year after year.
Regarding financial strengthening and economic development, a normative act for 2025 was also approved, allocating approximately ALL 1.2 billion, or around €12 million, to municipalities, aimed at reducing outstanding liabilities.
Financial sustainability is essential not only for medium-term planning but also for creating greater fiscal space to improve local services. This support is extremely important, and I am pleased that it has been finalized, enabling municipalities to address outstanding obligations in a more sustainable manner.
In 2026, for the first time, municipalities will manage over €1 billion at the local level, including own-source revenues and transfers from the state budget, as well as investments implemented by line ministries in local territories. The total benefit for municipalities in 2026 will amount to €1.2 billion—an unprecedented level of financial support that inevitably requires greater responsibility and focus from municipalities to meet citizens’ expectations.
We are all aware that each municipality faces its own challenges, depending on size, financial situation, demographics, and geographic scope. Day by day, however, we are creating the right conditions and institutions to respond more effectively to these challenges.
Another positive development for 2026 is the €20 million grant from the United Arab Emirates, which will be focused on strengthening municipalities through logistics and equipment, particularly for agricultural infrastructure and emergency preparedness, including flood response. This grant will enhance municipalities’ capacity to prevent and respond to emergencies more effectively.
In terms of financial empowerment and economic development, the concept of entrepreneurial municipalities is crucial. While municipalities are fundamental institutional actors in territorial management, their economic role remains underdeveloped. Strengthening their participation in economic value chains is vital for generating higher revenues and ensuring sustainable local development. In 2026, in close cooperation with the Ministry of Economy, we will promote this entrepreneurial approach at the local level, enabling municipalities to better manage their assets and contribute actively to economic growth.
From a regulatory perspective, 2026 will also introduce three legislative initiatives: Municipal Police, the Inspectorate of Territorial Protection (IMT), and the Law on the Prefect. This legal package will strengthen coordination and cooperation at the local level, standardizing recruitment, training, and operational procedures, particularly for the Municipal Police, to ensure transparency, meritocracy, and uniform national standards.
The European integration process will bring significant challenges, especially for municipalities, as new standards and responsibilities emerge. The Central Government will support municipalities financially and institutionally, ensuring they are prepared to absorb EU funds and meet future requirements. Instruments such as the Academy and the Performance Grant are designed to strengthen human resources and institutional capacity in anticipation of these challenges.
Finally, territorial reform remains the “elephant in the room.” This reform is essential to ensure municipalities have adequate assets, capacity, and economic potential to face future challenges. The process will be transparent, inclusive, and data-driven, building on lessons learned since the 2015 reform. Territorial reform is not merely about redrawing boundaries but about improving governance, service delivery, and long-term territorial development. It is a major challenge but also a unique opportunity, provided all actors—municipalities, civil society, partners, and institutions—are actively engaged in the process.